Concerns that growth is faltering combined with worries over political turmoil continue to weigh on emerging market funds. So far this year, withdrawals from US-based emerging market funds has topped $11 billion…already greater that the $8.8 billion total redemptions in 2013 (according to Bloomberg).
While it has bounced back from clearly oversold levels, the MSCI Emerging Market Index (EEM) is still down about -4% this year (and total assets of emerging market ETFs have dropped -10%). Indicators still signal a long-term sell.
What started out last year as a sell-off based on concerns about the Fed tapering monetary stimulus seems to have broadened into a stampede out of emerging markets based on a slew of worries. And until there is a clear indication that the trend is reversing, investors are better to stay on dry land.